Nikkei jumps 2.8 pct on softer yen, N.Korea report

(Adds detail, stocks)

By Aiko Hayashi

TOKYO, May 29 (Reuters) - The Nikkei stock average rose 2.8 percent on Thursday, led by high-tech exporters as the yen softened and further boosted by an unsubstantiated report that North Korean leader Kim Jong-il may be dead.

The benchmark Nikkei was up nearly 2 percent when talk about the Kim Jong-il report began to spread, a trader and a fund manager said.

"The rumour prompted short-covering in the market on receding worries about geopolitical risks," the trader said.

A little-known South Korean online news site reported Kim Jong-il had been assassinated, quoting a highly placed Chinese security official.

South Korea's National Intelligence Service said it had no information to substantiate the report and was making further checks.

North Korea's official media has had numerous reports this week of Kim out in public for inspection tours and South Korea's spy agency earlier this week denied a previous round of rumours of Kim's death.

The Nikkei .N225 added 383.28 points to 14,092.72 after falling 1.3 percent the previous day. It broke above the key 25-day moving average of 13,896.64.

The broader Topix index advanced 2.1 percent to 1,377.37.

The dollar steadied at 104.78 yen JPY=. It had hit a two-week high of 105.32 yen in New York on Wednesday before paring some of its gains.

Traders in the foreign exchange market around Asia have also cited the Kim Jong-il talk, though it has had little impact on currencies.

U.S. stocks rose on Wednesday after a government report on orders for durable goods -- long-lasting manufactured items -- showed a surprising jump in business investment last month. [ID:nN28333532]

"Durable goods data is a very volatile indicator and I doubt the situation will improve just because they reported a big jump this time," said Takahiko Murai, general manager of equities at Nozomi Securities.

"If poor economic data were to come out, stocks would be sold again. The overly optimistic views that the U.S. economy will recover later this year may have to be corrected a9 percent to 5,090 yen, industrial robot maker Fanuc Ltd (6954.T) advanced 3.9 percent to 10,950 yen and Toyota Motor Corp (7203.T) added 3.4 percent to 5,190 yen.

Investors had fretted over a stronger yen as it dents exporters' overseas profits when they are brought back home.